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Aditya Birla Capital LimitedAditya Birla Capital Limited (“ABCL”) is a listed systemically important non-deposit taking Non-Banking Financial Company (NBFC) and the holding company of the financial services businesses. ABCL and its subsidiaries/JVs provides a comprehensive suite of financial solutions across Loans, Investments, Insurance, and Payments to serve the diverse needs of customers across their lifecycles. Powered by over 61,600 employees, the businesses of ABCL have a nationwide reach with over 1,690 branches and more than 200,000 agents/channel partners along with several bank partners.
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What is a Banking and PSU Funds ?
A banking and PSU fund is a debt mutual fund which invests a majority of its portfolio in debt instruments offered by banks and public-sector undertakings.
Advantages of Banking and PSU Funds
Good returns
These funds have the potential to generate attractive returns on your investment which helps in growing your corpus with added stability.
Liquidity
With the portfolio allocated in the bank and PSU debt instruments, you can enjoy a good portfolio with quality securities.
Capital appreciation
Since the fund invests in high-rated bonds, the credit risk is minimal. Bonds carrying a high credit rating have proven track record of repayment and do not tend to default.
Lower Risk Profile
Benefit from investments in debt instruments of scheduled banks and public sector undertakings, which generally carry a lower risk due to government backing.
Explore Banking and PSU Fund
Most Popular
AUM: 23427(Cr)
Risk: Very High
- MIN. INVESTMENT 500
- 5 YRS RETURNS 33.32%
- Invest (Per Month) ₹10000
- Get (30 Yrs) ₹24,850*
*Projections/estimations is backtested using historical data.
Most Popular
- AUM: 23427(Cr)
- Risk: High
- MIN. INVESTMENT 1000
- 5 YRS RETURNS 33.32%
- Invest (Per Month) ₹15000
- Get (30 Yrs) ₹34,850*
*Projections/estimations is backtested using historical data.
Banking and PSU Funds Returns Calculator
REGULAR INVESTMENT
SIP
Invest systematically in regular amounts and build a corpus with a disciplined investing habit.
START SIPONE TIME INVESTMENT
Lump sum
Invest once with the facility of lump sum investing and save at your will. Time the market correctly and earn good returns.
INVEST LUMPSUMTotal Amount Invested
₹ 0
after 30 years you will get a return of
₹ 0
Disclaimer: Projections/estimations is backtested using historical data.
Total Amount Invested
₹ 0
after 30 years you will get a return of
₹ 0
Disclaimer: Projections/estimations is backtested using historical data.
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Understanding Banking and PSU Fund
Table of Contents
What are Banking and PSU Funds?
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A type of open-ended debt mutual fund, a banking and PSU fund, invests at least 80% of its portfolio in debt instruments issued by banks and public-sector undertakings. These instruments carry a good rating and are backed by good issuers, making the fund attractive for investors.
What are the features of Banking and PSU Funds?
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Offers stable returns on investment with minimal credit risk
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Good portfolio with quality investment in banking and PSU securities
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There’s no capping on the maximum investment amount
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You can get better returns compared to fixed deposits
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The funds aim to grow the portfolio through interest earned and also through the rise in the price of the underlying securities
Things to keep in mind when investing in Banking and PSU Funds
Check the expense ratio of such schemes. A high ratio eats into the fund’s returns and should be avoided
Compare Banking and PSU Funds on their returns. A fund with the highest return is better
Check the portfolio for the credit rating of the underlying securities
What are the types of risks that Banking and PSU Funds face?
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Credit risk
Risk of default on the debt instrument
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Interest rate risk
Risk of rising interest rates, which reduces the value of debt instruments
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Inflation risk
Risk of inflation reducing the returns from the debt fund
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Liquidity risk
Risk of not being able to trade in debt instruments
What is the tax implication of Banking and PSU Funds?
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Returns earned are taxed at your income tax slab rates
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Dividends earned, if any, are taxed at your income tax slab rate
What are the payout options?
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Dividend option
Earn dividends on your investment at regular intervals
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Growth option
Accumulate the returns over the investment tenure and get a lump sum amount on redemption
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FAQs On Banking and PSU Fund
PSU funds are debt mutual funds that lend only to PSUs (Public Sector Undertakings).They are one of the popular low-risk fund categories.
Banking and PSU Funds invest at least 80% of the total corpus in instruments issued by banks and public sector companies.
You can invest in Banking and PSU Funds through the Aditya Birla Capital website. Please visit the mutual fund section for steps involved.
No, Banking and PSU Funds do not come with a lock-in period.
As the instruments invested in have central government backing, Banking and PSU Funds are significantly less risky as compared to quite a few other debt funds.
Banking and PSU Funds have high liquidity. You can liquidate them at any point as required.
Banking and PSU Funds redemptions are taxed as capital gains in India. As per law, a fund held for less than 3 years is taxed as per your income tax slab rate. An investment of more than 3 years attracts a 20% tax.
Yes, Banking and PSU Funds are good for investments spanning 3+ years.
Usually, the minimum amount required is ₹1000.
Interest rate volatility can affect Banking and PSU Funds. Interest rate movements are inversely proportional to banking and PSU fund returns.i.e. when interest rates rise, you have a chance at less returns.
If you are a risk averse investor looking for an alternative to fixed deposits, and have a considerable investment horizon (3+ years), you can surely consider Banking and PSU Funds.
Banking and PSU Funds are very low on risk. The main risk associated with them is interest rate risk.
The main advantage of Banking and PSU Funds is that they are a better alternative to traditional savings instruments in terms of returns, with relative safety and credibility.
Yes, you can invest in Banking and PSU Funds via SIP.
The credit rating of companies that issue Banking and PSU Funds is usually at least AAA-.
Types of Debt Funds
Funds Based On Duration
Funds Based On Portfolio Allocation
Other asset class funds
Equity Fund
Give your savings the growth they deserve. Invest in Equity Funds and unlock the potential of long-term growth
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Mutual funds that invest in other mutual funds both in India and globally
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Get a mix of equity, debt and other asset classes for a diversified portfolio
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Index Fund
Passively-managed mutual funds tracking a particular index
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ETF Funds
Invest in funds listed and traded on the stock exchange